Married men should not make a will — this is a dangerous illusion

I have just ran across an article by Christopher P. Hill
a financial planner from the east coast. I try to cover end of life planning in my webinars, but have never said it this well. I know that the articles is a tad bit aged, and that congress has worked their way through the Bush tax cuts, which affects end of life tax planning, but I encourage all of you to read this article and take it to heart. I have had a personal experience which causes me to believe that every married couple should have a Living Trust, no matter what their economic position. I truly believe that the use of a Family Living Trust is not so much about the size of the estate, but more about the ability of the survivors to go on, without having to make detailed decisions at a vulnerable time and at a time that they may or may not have all of the information necessay to make the decision. If you want more information on Living trusts, give me a call, I will be glad to share my story with you. Where Christopher has used the term Married Men, I would change it to read, "married men and women."

Married men: Do not make a will. For a married man, the security he believes a will provides is a dangerous illusion. In order to truly provide the security he desires for his survivors, he must heed the following advice, including changing the names on his accounts and house.

The will illusion
We have all heard the TV and radio ads that tell you that wills are necessary, and that you can use a computer, rather than hire an expensive lawyer, to make your will. I tell married clients that often, making a will creates an illusion of security that lulls them into a dangerous complacency. It is worse when a husband wants to make a will without his wife’s participation.

Why have a will?
Most married men who sign a will want to accomplish the following objectives: Make sure their property goes to their spouse and children; designate who will be the guardian of their children; make sure things go smoothly when they die; and protect the inheritance of their children. For the typical married man, none of these objectives are likely to be accomplished through the creation of a will, as can be seen in the following scenarios.

Ensure property goes to spouse
Seventy percent of married men own their house, bank and brokerage accounts, and household goods jointly with their wives. The number is higher for those in their first marriage. These men also usually designate their wives as the sole beneficiary of their retirement accounts and life insurance policies. They then sign a will, thinking they have protected their wives and children.

Most men die before their wives. When the man dies, everything goes to his wife, because their property is owned jointly, and the will has no effect on the beneficiary designations on their insurance or retirement accounts. There is no protection of his wife of against her creditors, and her disability and estate taxes will be higher. This is because the title to property overrides any provision of the will. If the man named his parents as the beneficiaries on his insurance or retirement accounts and did not change the beneficiary designations when he got married, then these accounts go to his parents if they survive him, or to a probate estate if they do not. Beneficiary designations override the provisions of a will.

Protect his children
Often, the married men I advise want to make sure that after taking care of their wives and that their property goes to their children, and they want their will to reflect that. But, if the wife survives the husband, everything goes directly to her, either by title or because the will says so. If the wife remarries, then there is no protection for the children. The share of the property will go to the next husband and his children if the next husband survives his wife or, in the case of a divorce, one half of the first husband's share will go to the second husband. I have talked to many children who were unintentionally disinherited this way.

Guardians for his children
A husband dies first, survived by his wife. The wife is now the guardian of the children, and the wife now decides who will be the guardian of his children if she then dies. The husband’s will is irrelevant at this point. Also, if the children are minors or disabled and if the wife does not have a will, in most states, the court will appoint the guardian and supervise the finances of the children until they are 18, depending upon the legal age for children in their state.

The problem of probate
Many people I have advised think that a will avoids probate. Not so. The will’s purpose is to direct the probate process. Instead, any property passing under a will must be probated. Probate is the state legal process requiring that the will and a detailed list of assets are filed on the public record. Someday soon, your neighbor may be able to go online and see to whom you left your property. There are notice and accounting requirements which vary from state to state, and in some states, they are quite onerous and expensive to comply with. Probating a will is like filing a lawsuit against yourself, with a notice for everyone who has a claim to join in the lawsuit without the need to hire an attorney or file their own case.

Solutions that do not work
The solution is not to make sure the wife dies first. Even if a husband and wife make identical wills and the husband dies first, none of the above is really changed, because the wife has a will. Non-married couples come out ahead if they do not own their property jointly, because the non-married man’s will determines who inherits his separately owned property. Some married couples go so far as to get rid of jointly owned property, thereby requiring a probate when the husband dies, and then again when the wife dies. This enables probate lawyers to collect a lot of fees.

Solutions that work
To accomplish his goals, the married man needs to set up a living trust and put the name of the trust on his accounts and real estate. He then must name his trust as the death beneficiary of his insurance and retirement accounts. To have an estate plan which accomplishes your goals, I strongly suggest you sit down with a seasoned estate planning attorney. If you need help finding one, I can help direct you to some great places to start.